What Does a Bonding Company Do?

Bonded Area Enterprises (Bonded Area), also known as bonded warehouse areas, are economic areas established with the approval of the State Council and implemented by the customs for special supervision. They are the economic areas with the greatest degree of openness and freedom in China. Its functions are positioned as the three functions of "bonded storage, export processing, and re-export trade". According to the current relevant policies, the Customs implements closed management of the bonded area, and overseas goods enter the bonded area and are subject to bonded management; goods from other areas in the country enter the bonded area and are treated as exits; at the same time, foreign trade, foreign exchange management and other departments also implement relatively preferential treatment for bonded areas Policy

Free Zone Enterprises

Chinese name: Free Zone Enterprises
Foreign name: Bonded Area

Alias: Bonded warehouse area
Types of: Economic region

From the approval of the State Council in May 1990 to the establishment of the first bonded zone, China has established Shanghai Waigaoqiao, Tianjin Port, Shenzhen Futian, Shatoujiao and Yantian Port, Dalian, Guangzhou, Zhangjiagang, Haikou, Xiamen Xiangyu, Fuzhou, There are 15 bonded areas in Ningbo, Qingdao, Shantou, Zhuhai, etc. The competent authority is the General Administration of Customs. The original functional positioning of the bonded area was warehousing, re-exports, and processing. In fact, it was mainly logistics. For more than a decade, the functions of bonded warehousing, re-export trade, and merchandise display in 15 bonded areas across the country have developed to varying degrees, with a certain scale of international logistics foundation. When China joined the WTO in 2001, it promised to gradually liberalize the right to trade in industrial products within three years, and to phase out market quotas and other quantitative restrictions on various commodities within five years. These commitments are likely to make foreign investors who originally invested in trade companies in the bonded zone According to the advantages and disadvantages of the overall investment environment, re-selection of investment areas has led to a reduction in the number of trading companies in the bonded area. In addition, with the increasing proportion of service trade in international trade, China will also maximize the opening of the service industry to other members in accordance with WTO market access principles. All of this will make the bonded zone face new challenges. The preferential policies enjoyed by the bonded zone will gradually weaken. If the bonded zone is to survive in the competition, it must transform into an internationally popular free trade zone.

Factors Restricting the Development of the Free Trade Zone

1. Regional nature. Free trade zone is a special area under the supervision of the customs. It does not have the extra-judicial customs rights of the free trade zone and free port. The enjoyment of customs extraterritoriality is the most basic feature of free trade zones and free ports.

2. Customs supervision. The customs did not implement the management of the bonded area according to the "first line release and second line control", but regarded the bonded area as a large bonded warehouse, and managed the bonded area by the method of managing the bonded warehouse. The customs did not conduct regional management of the bonded area, but Directly manage each company in the area.

Third, trade management. China has a lot of restrictions on trade in the bonded zone. The Ministry of Commerce regards enterprises in the bonded zone as foreign companies. Trade companies in the bonded zone do not have the right to operate import and export and cannot carry out international trade. The State Administration of Taxation also stipulates that domestic goods exported through the bonded area must be physically departed before the tax refund can be granted. Goods from the country to the bonded area are treated as exports, but no tax refund is granted.

Fourth, foreign exchange management. In foreign free trade zones, foreign exchange can be freely converted, funds can be moved in and out freely, and funds can be freely operated. The enterprises in China's bonded zones have more restrictions on foreign exchange purchases and settlements than those outside the bonded zones.

Fifth, the function of the bonded area. Judging from the current development, the import trade function of the bonded zone is relatively strong, and the functions of attracting foreign investment and developing export manufacturing are similar to those of economic and technological development zones. Moreover, most bonded zones have no obvious advantage in developing import distribution logistics. Because there are a large number of bonded factories and bonded warehouses outside the zone, although the bonded zone has a policy of delayed taxation on imports, the advantages are not obvious. The bonded areas with better operating conditions mainly rely on the export processing industry and import warehousing allocation, but the port trade, re-export trade, export warehousing and logistics processing have not been developed, and there has been no regional and port linkage and mutual promotion. After China's entry into the WTO, with the reduction of tariff levels, the policy advantages of import bonded distribution will gradually weaken.

6. Scalability of the logistics service industry. When the state established the bonded area, it did not establish a unified evaluation guideline, and the specific operations and assessments were the responsibility of local governments. When assessing, local governments focused on direct benefits such as attracting foreign investment, increasing employment and taxes, and GDP growth, and focused their efforts on attracting investment and developing industrial projects. Most of the existing bonded areas have developed into special economic zones for processing and manufacturing. In some bonded areas, there is almost no land for the development of logistics services, and the development space of logistics services is restricted.

7. The policy and management system for the development of re-export trade and related logistics business have not yet been established. The actual development of the bonded area deviates from the original functional design, and there have been functional overlaps and overlaps with special economic areas such as economic and technological development zones, high-tech parks, and export processing zones. The bonded zone is separated from the port, and the port functions are restricted. The freedom of enterprises in the bonded zone to engage in trade and trade support service activities is very low. The principles of "domestic customs clearance" and "front-line deregulation, second-line control, and freedom within the region" have not been implemented. The goal of the reform of the free trade zone is to transform to a free trade zone. The research report issued by the "Development Model Research Group of China's Free Trade Zones" released by the State Council Development Research Center believes that in order to adapt to the new situation of China's import and export trade and the rapid expansion of port container transport, there are conditions. The bonded area should be transformed into a free trade port area, give full play to logistics functions, and promote the construction of China's international hub port. The design of the bonded zone transformation design is: part of the bonded zone will be transformed into an export processing zone or an economic and technological development zone. Most bonded zones will continue to develop export processing industries in the zone, merge into the economic and technological development zone, or transform into a port export processing zone. Another part of the bonded zone will be transformed into a free trade zone. Select a few bonded zones as a pilot, implement the integration of district and port, implement certain policies of free ports in the zone, and take port international logistics as the core function to develop trade, shipping, warehousing, merchandise display, and financial services. International re-export trade provides high-quality, convenient and low-cost logistics services, and promotes the development of several major container ports along China's coasts into international hub ports and gradually transforms into a free trade port area. On December 14, 2003, Gong Zheng, deputy director of the General Administration of Customs, stated clearly that the goal of the transition of the bonded area is to establish an internationally-traded free trade zone. The first pilot has been identified as Shanghai, and the pilot work will begin immediately. In addition to Shanghai Overseas, the country will also choose 1-2 bonded areas for piloting, and strive to complete the pilot tasks by the end of 2006, and then carry out the transformation of other bonded areas. According to the pilot scheme of the General Administration of Customs, the first step in the transformation of Shanghai Waigaoqiao Free Trade Zone to a free trade zone will be to connect the currently separated Shanghai Port and Waigaoqiao Free Trade Zone together to achieve port- zone linkage. The scope of the bonded area will be extended to the entire port, with a bonded terminal. It is expected that the transformation of the bonded zone will basically be realized through the process of integrated development of the zone and the port, but there is no further news on the specific transformation method. In addition to Shanghai Overseas, the country will choose another 1-2 bonded zones for piloting, and Shenzhen is currently one of its most powerful competitors due to its own advantages. In early 2003, Shenzhen merged the three bonded areas and made a careful proposal: transform the bonded areas into international free trade zones. Qingdao Free Trade Zone is an active practitioner following the transition from Shanghai and Shenzhen to a free trade zone. At the same time, Tianjin and Dalian Free Trade Zones have also explicitly proposed to build a free trade zone in Northeast Asia and formulated their own transformation plans. In addition, Xiamen, Zhuhai, Shantou and other places have begun to promote the integration of local ports and free trade zones, creating conditions for the establishment of free port zones. The free trade zone is ushering in a wave of free trade zone construction.

An important reason for the misalignment in the development of China's free trade zone is that the policies and supporting policies needed for functional transformation are due to the fact that the policy and management system for the development of free trade port areas have not yet been established. In order to support the transition of bonded areas to free trade port areas, China must not only adjust its existing policies on bonded areas, but also formulate some new supportive policies.

I. Export tax refund policy. At present, domestic non-bonded goods are not refunded when they enter the bonded area, and they must be exported when the goods leave the country. In the case that the export processing zone and other bonded warehouses have implemented tax rebate into the zone (warehouse), the goods entering the bonded zone cannot implement the export tax rebate policy, which makes the bonded zone lose the attractiveness of bonded warehouses for export goods. The policy adjustment direction is that domestic goods entering the bonded area are deemed to be exported, and goods that should enjoy tax rebate can be processed for export tax rebates by means of export declarations, foreign exchange write-offs, VAT invoices and other documents, without having to wait for the goods to leave.

Second, the right to trade. 1. Right to import and export business activities. As the Ministry of Commerce treats the enterprises in the bonded zone as overseas enterprises, the enterprises in the bonded zone generally do not have the right to operate foreign trade. Enterprises in the bonded zone, especially foreign trade companies, must carry out import and export business through foreign trade companies with import and export operation rights, which increases the operating costs of enterprises in the zone and complicates commercial transactions. The import and export operation rights of enterprises in the bonded zone shall be granted, the import and export operation rights of processing enterprises in the zone shall be liberalized, and foreign trade companies shall be allowed to conduct domestic import and export trade conditionally while engaging in re-export trade. Now we can see the trend of policy adjustment. Since 2003, the Ministry of Commerce has begun to open the import and export operation rights to enterprises in the four bonded zones, including Shanghai and Shenzhen. 2. Trade in services. Although the State Council has specified that the Shanghai Waigaoqiao Free Trade Zone can be used as a pilot in 1995, the corresponding approval authority is in the ministries and commissions of the State Council. It has not explicitly delegated the approval authority, has no supporting policies and management regulations, and lacks operability. In contrast, after China's accession to the WTO, the pace of opening trade in services outside the bonded zone has accelerated. The state should release the examination and approval authority for service trade in the bonded area, build a commodity display center, attract international multinational companies and integrated trading companies to settle in the bonded area, and promote the development of international trade in services such as international leasing, international shipping, international legal services, and international commodity display. 3. Financial foreign exchange management policies. The "Measures for the Administration of Foreign Exchange in Bonded Areas", which came into effect in October 2002, have created conditions for enterprises in the bonded areas to carry out normal business activities. However, some regulations on foreign exchange payment for imports are still more stringent. Although this helps reduce the phenomenon of foreign exchange evasion, However, many inconveniences have been added to the companies in the region, and some have even restricted the normal business activities of the enterprises. The main manifestations are: strict restrictions on foreign exchange purchases, basically not allowing foreign exchange purchases, and enterprises registered in RMB to purchase foreign exchange payment quotas Must not exceed the actual RMB investment portion of its registered capital; strict payment procedures. For example, if an enterprise in the region sells goods imported from overseas to an enterprise outside the region, when the enterprise pays foreign exchange overseas, it must hold an import declaration form for the enterprise outside the region. But in fact, many companies outside the zone will store the goods in the bonded area first to enjoy the benefits of delayed tax payment without going through import declaration procedures. At this time, the companies in the zone cannot pay overseas. The policy adjustment direction should be: payments under the current account should be completely liberalized, and currencies under the current account in the district can be freely exchanged. In terms of foreign exchange supervision, the State Administration of Foreign Exchange should focus its energies on the supervision of commercial banks, which, while handling the settlement and sale of foreign exchange for enterprises, shall also monitor the foreign exchange business activities of enterprises. To promote the combination of production and circulation, import and export trade and re-export trade. Fourth, the access policy of the logistics industry. The logistics industry is an emerging comprehensive industry, involving freight forwarding, container transportation, rail freight, road freight, air transportation, warehousing and other industries. At present, these industry areas are headed by different government departments, and each department has different industry access standards, and in particular, there are certain restrictions on foreign investment. Therefore, in order to carry out comprehensive logistics services, enterprises must apply for business licenses from different authorities, and the procedures are quite complicated. The absence of large logistics companies will limit the transformation and development of China's free trade zone into a free trade port area. Therefore, the direction of policy adjustment may include: For the establishment of logistics enterprises in the bonded area or free trade port area, an encouragement policy should be implemented in the examination and approval to simplify the examination and approval procedures. And allow foreign investment to enter the logistics service industry in the bonded zone or free trade port area early. 5. Customs clearance, inspection procedures and transportation supervision policies. Although China's bonded areas are all built near the port, they are mostly separated from the port area. In terms of management, the two also belong to different departments. Goods entering and leaving the port and the bonded area are subject to a second customs clearance. The management of LCL transportation has largely restricted the enterprises in the region from carrying out logistics transportation services. Because the logistics company calculates according to customer requirements and cost accounting, it will store the goods in different bonded areas (or different warehouses in the same bonded area), the goods arrived at the bonded area at different times, the goods of different suppliers, and the goods of import warehouse and export warehouse Carry out LCL operations. In the current customs regulations, although the above-mentioned business operations are not explicitly prohibited, due to the requirement that multiple documents must be checked for consistency during customs supervision, LCL transportation is actually difficult to carry out, which hinders the convenient and smooth flow of goods. The direction of policy adjustment should include: connecting the bonded area and the port area, implementing unified supervision of the area and port, and avoiding duplicate procedures for secondary customs clearance. When the form, quantity, tax number, and other properties of the goods are changed due to the simple processing and transportation operations of the enterprises in the zone, the customs can check the record records in a targeted manner during the supervision. It is not required to be consistent, as long as it is basically corresponding . In terms of warehousing and display, commodities other than prohibited and restricted goods are allowed to enter the warehousing and display in the bonded area, and related taxes and fees are given a reduction or exemption to distinguish them from ports and non-bonded areas. The bonded area will be clearly defined as domestic and overseas, and will gradually transition to a front-line liberalization, second-line control, and non-intervention in the area regulatory model, and transition to a free trade zone. The development model of the bonded area requires it to adopt more flexible and open measures in customs clearance, logistics, foreign exchange finance, and other aspects. Now, poor customs clearance and weakened advantages have become a common problem faced by bonded areas. Only the transition to a free trade zone or a pure economic development zone can guarantee the continuous development of this special economic zone.

:: Zhuhai Free Trade Zone :: Distinguished Public Address: Hongwan, Zhuhai Free Trade Zone, Zhuhai, Guangdong, China was established on November 3, 1996 with the approval of the State Council, covering an area of 3 square kilometers.

:: Ningbo Free Trade Zone :: Distinguished Public Address: Ningbo Beilun Free Trade Building Ningbo Free Trade Zone was established in November 1992 with the approval of the State Council. The planned area is 2.3 square kilometers. It has functions of import and export processing, international trade, bonded storage, and product display. "Certificate exemption, tax exemption, bonded" policy and the implementation of "domestic customs clearance" operation mode, is one of China's most open to the outside world, the most convenient operating mechanism, the most preferential policies of special economic areas.

:: Shanghai Waigaoqiao Free Trade Zone :: Distinguishing Public Address: Shanghai Waigaoqiao Free Trade Zone, No. 2 Huajing Road, Waigaoqiao Free Trade Zone, Pudong, Shanghai, China

:: Haikou Free Trade Zone :: Public address: Haikou Free Trade Zone, Room 201, South Building, Pioneer Park, Haikou Free Trade Zone (High-tech Zone), No. 168, Nanhai Avenue, Haikou, Hainan Province, Haikou Free Trade Zone was established on October 21, 1992 with the approval of the State Council. Day switch operation, an area of 193 hectares.

:: Tianjin Port Free Trade Zone :: As the most open economic area in China, Tianjin Port Free Trade Zone was established with the approval of the State Council on May 12, 1991

:: Ningbo Free Trade Zone :: Distinguished Public Address: Ningbo Free Trade Zone Bonded Building Ningbo Free Trade Zone was established in 1992 with the approval of the State Council. It has a planned area of 2.3 square meters and has functions such as international trade, export processing, warehousing and logistics, and product display.

:: Dalian Free Trade Zone :: Dalian Free Trade Zone is located between Dalian Economic and Technological Development Zone and Dayaowan International Deepwater Port. It was established on May 13, 1992 with the approval of the State Council, and it is a specific area under the supervision of the customs.

:: Shenzhen Free Trade Zone :: Distinguished Public Address: Futian Free Trade Zone Management Building Futian Free Trade Zone was established with the approval of the State Council on May 28, 1991, and the segregation fence facility passed the inspection and acceptance of the General Administration of Customs on February 18, 1993. Area is 1.35 square kilometers

:: Fuzhou Free Trade Zone :: Fuzhou Free Trade Zone was established in 1992 with the approval of the State Council, with a planned area of 1.8 square kilometers.

:: Qingdao Free Trade Zone ::: Qingdao Free Trade Zone was established on November 19, 1992 with the approval of the State Council

:: Guangzhou Free Trade Zone :: Guangzhou Free Trade Zone is located in the east of Guangzhou, the eastern edge of Huangpu District, Guangzhou, and the north of Guangzhou Economic and Technological Development Zone. The northwest of the bonded area is bounded by the Hengjiao River, it faces the Dongjiang River in the east, and it borders the development zone in the south.

:: Zhangjiagang Free Trade Zone :: Distinguished Public Address: Zhangjiagang Free Trade Zone Administrative Committee Office Zhangjiagang Free Trade Zone in Jiangsu Province is the only inland river free trade zone approved by the State Council in October 1992.

:: Xiamen Xiangyu Free Trade Zone :: Distinguished Public Address: Xiamen Xiangyu Free Trade Zone, 9th Floor, Yinsheng Building, Shugang Road, Xiamen, was established in October 1992 with the approval of the State Council. It is located in the port area of Xiamen City, a hotspot city for cross-strait communication.

:: Shantou Free Trade Zone :: Distinguished Public Address: Shantou Free Trade Zone Administration Committee Building, Shantou Free Trade Zone, Guangdong Province, China

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